Anyone who has worked with Exchange or Outlook for more than 10 minutes will know about PST files. However despite their numerous flaws, they continue to be in widespread use. Where possible you should ban their use, particularly for archiving purposes.

The main arguments against using PST files are:

Data Loss When They Get Too Large

With Outlook 2002 and older, PST files can go to a maximum of 2gb, but in an annoying flaw, the file will allow you to continue to add data past the 2gb limit. You only get problems when you try to open the file again. Microsoft do have a tool that will allow you to open a file that has gone over the limit, but it simply chops off all data over 2gb - therefore resulting in data loss.

With Outlook 2003 and higher a new format of PST file is used (which is not backwards compatible) which allows PST files to go to 20gb. You cannot convert the old version to the new one. If you have create the wrong type then you will need to create it again and move the content across.

PST files are very fragile things, particularly the larger they get. Many people will suggest a new PST file at 1gb or less to protect the data.

That basically means they are impossible to backup. You cannot store them locally and backup over a network, and you cannot store them on a network share and access them over the network. Considering how fragile they are this is asking for problems.

Single Point of Failure / Risk of Corruption without Knowing

It is perfectly possible to have a corrupt PST file and not know about it for weeks or months. It is perfectly possible to continue to access and have open a PST file and not know that some of the data has become inaccessible. Furthermore due to the fact that they are not supported being accessed over a network, that means keeping copies of them is not really practical. You cannot store them in "Read Only" format or access directly from a CD as the file will not open. Outlook needs write access to open the file. That would mean copying the file off the read only source, changing the tag on the file and then opening it. That could cause corruption in the file.

File Bloat

Due to the way that PST files store their data, they will actually use more space than the same data in Exchange - up to three times, and that is not taking in to account the loss of single instance storage. 100mb of email can be as much as 300mb in a PST file. If ten users were sent a 2mb file in Exchange, then it uses 2mb of space in the store. Extract to PST files that same file would use up to 60mb as each user has their own copy in three different formats.

PST Files are not an Archiving Solution

The above should be enough to know that they are not an archiving solution. If you value your data do not store it in a PST file. If you need to keep content for regulatory reasons, then a PST file will fail on many counts, such as allowing the user to modify the item after it has been received.

Are there any reasons to use PST Files?

If you aren't connected to Exchange, then you have no option but to use PST files.

With migrations, in some scenarios they are the only option, because they are domain independent. A PST file from one domain can have its contents imported in to another domain. However the same issues with the files remain, so when using them for this type of migration caution must be taken to ensure the data remains intact.

Conclusion

Hopefully the above will give you some idea why PST files should not be used where there is any value to the data.